If ending inventory for the current accounting period is understated by $4,700:

Question

Quizplus · Accepted Answer

If ending inventory is understated, it means that the cost of goods sold (COGS) is overstated because the ending inventory is subtracted from goods available for sale to calculate COGS. This does not directly affect the beginning inventory of the next period, net income overstatement, or owner's equity in the next period in the ways described by the other options.

If Ending Inventory for the Current Accounting Period Is Understated